340B HEALTH RESPONDS TO SEN. CASSIDY’S REPORT ON THE 340B DRUG PRICING PROGRAM
WASHINGTON, D.C.— Today, Sen. Bill Cassidy (R-La.), chairman of the Senate Health, Education, Labor, and Pensions (HELP) Committee, released a report outlining his office’s investigation into the 340B drug pricing program.
In response, Maureen Testoni, president and CEO of 340B Health, issued the following statement:
“On behalf of over 1,600 340B hospitals, 340B Health appreciates Senator Cassidy’s interest in 340B and his efforts to understand its role in supporting care for patients with low incomes and those living in underserved communities. That said, we have concerns with several aspects of the report that may not fully reflect the purpose or implementation of 340B:
- The report highlights drugs from which the providers obtained 340B discounts but does not disclose that some of these drugs are subject to higher-than-normal 340B discounts due to a penalty levied when manufacturers increase their drugs above the rate of inflation or offer significant discounts to other purchasers of their drugs. If the manufacturer activities are significant over time, the 340B discount can reach as high as 100% instead of the statutory minimum for brand drugs of 23.1%. Thus, the 340B savings reported for such drugs is due to the manufacturers’ decisions on how high to price these drugs, not to use by providers.
- The reports accompanying enactment of the 340B statute specifically state that a key purpose of 340B is to reduce the “cost of operations” for the entities that qualify under 340B. For hospitals, the qualifying criteria primarily require that the hospitals serve a disproportionate share of low-income individuals or are designated as critical access hospitals by Medicare.
- The report draws a distinction between using 340B savings to reduce costs to individual patients for care they receive and using savings for capital improvements and community benefits. It is important to keep in mind that 340B helps maintain access to care for low-income patients. Without capital improvements and community benefits, providers cannot make the upgrades, add newly developed specialized services that save lives, and address key health care needs of the community, such as the need to add mental health services, resulting in decreased access to care over time.
- The report overlooks a substantial body of research showing that 340B hospitals are responsible for delivering 77% of all Medicaid hospital care and 67% of the nation’s unpaid care. These hospitals also operate under tighter financial margins than non-340B hospitals, and their use of 340B savings is essential to offset chronic underpayments from government health programs.
“We remain committed to working with Senator Cassidy and Congress to ensure that 340B continues delivering value to low-income patients and underserved communities nationwide.”
Contact: Jon Tilton at jon.tilton@340bhealth.org or 202-536-2285